FedEx stock jumped more than 12% during after-hours trading on Thursday after the company reported a better-than-expected third quarter and announced a new $5 billion share buyback program.
“We are making meaningful progress on our transformation, while strengthening our value proposition and improving the customer experience,” said Raj Subramaniam, FedEx president and CEO, in a press release.
Last year, the shipping giant launched a multiyear initiative called DRIVE aimed at cutting $4 billion in costs by the end of fiscal year 2025.
So far, the plan seems to be working.
“For the third consecutive quarter, we delivered operating income growth and margin expansion in a declining revenue environment,” Subramaniam told investors during a call Thursday evening.
FedEx’s third quarter, by the digits
FedEx’s net income rose 14% in the three months ending Feb. 29 to $879 million from about $771 million in the same period the prior year.
The company’s revenue in the quarter fell 2% year over year to $21.7 billion, from $22.2 billion.
Its diluted earnings per share came to $3.86, well above Wall Street expectations of $3.43, according to a consensus estimate from analysts surveyed by FactSet.
FedEx is buying even more of its shares back
The company also announced that its board approved a new $5 billion share repurchase program.
This is in addition to $1 billion in shares the company already purchased this past quarter. The company also expects to buy an additional $500 million in stock, bringing its buyback total in fiscal year 2024 to $2.5 billion.
Companies implement stock repurchasing programs to reduce the number of outstanding shares and ideally increase their value.